Overcontributing to TSP - is DFAS smart enough to stop you?

[domingo3]

I don't want to overcontribute, but I do want to max it out. I'd like to know if I can set my contributions a few percent higher than the annual contribution limit to basically "set it and forget it" so I don't have recalculate after each pay raise or when the contribution limits increase.
Additionally, although I know the dollar amount is inconsequential, it would really bother me if my contribution to TSP was $16,997.72 for the year, when I know I could have contributed another $2.28.
If I set my contributions so that the annual total would be $18000, for example, or $1500 per month, would DFAS/TSP modify my December payment to $500, stop the last payment altogether, or let me overcontribute $1000, and leave me with a mess to clean up? If anybody could point me to a reference where this is written, I'd really appreciate it. I haven't been able to find it.

Thanks!

 

[burrocrat]

I don't want to overcontribute, but I do want to max it out. I'd like to know if I can set my contributions a few percent higher than the annual contribution limit to basically "set it and forget it" so I don't have recalculate after each pay raise or when the contribution limits increase.
Additionally, although I know the dollar amount is inconsequential, it would really bother me if my contribution to TSP was $16,997.72 for the year, when I know I could have contributed another $2.28.
If I set my contributions so that the annual total would be $18000, for example, or $1500 per month, would DFAS/TSP modify my December payment to $500, stop the last payment altogether, or let me overcontribute $1000, and leave me with a mess to clean up? If anybody could point me to a reference where this is written, I'd really appreciate it. I haven't been able to find it.

Thanks!

there are some threads around here that explain in detail. basically it's like this:

if you overcontribute you will have an irs problem. if you undercontribute you state you will have a personal problem. solution is to contribute exactly as much as you want to. 17,000 / 12pp = 1,416.66 each month. or 17,000 / 26pp = 663.84 every two weeks. you still come up short a few pennies that way so figure out how many and set your tsp that much higher the first pp if the extra nickle really bugs you that much and then adjust back down to above amounts for the remainder of the year.

this may not apply if you are military, but keep in mind that the up to 5% tsp match applies each time you make a contribution, not how much you put in each year. max out in 10 months and contribute nothing in nov and dec then you get no match those months either, leaving free money on the table.

if you want something done right you have to do it yourself.

 

[domingo3]

Thank you for the reply. I understand that overcontributing is bad, and I don't want to do it. My question is if the DFAS system will regulate the contributions. Under DFAS, I don't have the luxury of designating $663.84 every two weeks. I can only designate an integer percent of my pay per month, so I have much less fidelity.

 

[ILoveTDs]

I'm a AF civilian under DFAS and I can set a percent or dollar amount under EBIS, if your an AF civilian you should be able to do the same.

 

[Boghie]

Perfect responses...

I usually add some boring commentary, but no need today. Other than this, don't worry about a couple of bucks when you might have to worry about a lifetime of paperwork and accounting owed to the IRS. While that $3 might result in an annual retirement distribution of $12 (declining every year) you will spend endless amounts of time paperworking or justifying the $3 in overcontributions. Yuk and double yuk.

 

[Frixxxx]

As I have posted before, you will get a check back from TSP if you over-contribute.....Your taxable income will be figured out by your tax-person with the max allowable in the form.

Link

I provided a spreadsheet here to do the calculations based on salary and maxes.

The new limit changes should be out soon, if any. I doubt it since the administrations need the money. Rumor is $17,500 will be the new limit..will recreate an excel spreadsheet next week.

 

[alevin]

The only problem with a slight miss on the underside is that it could screw up your over-50 catchup contributions if you are trying to add those to your pot. You have to max out the regular tsp limits on annual basis before they will accept your catchups. I have catchup taken out each pp (5500/26), along with the regular 17000/26. As I understand it, if the regular contribs are a few $ over at end of year due to averaging/pp, they don't take the extra few $ of regular contrib out.

 

[PessOptimist]

The only problem with a slight miss on the underside is that it could screw up your over-50 catchup contributions if you are trying to add those to your pot. You have to max out the regular tsp limits on annual basis before they will accept your catchups. I have catchup taken out each pp (5500/26), along with the regular 17000/26. As I understand it, if the regular contribs are a few $ over at end of year due to averaging/pp, they don't take the extra few $ of regular contrib out.

That has been my experience too, If your regular contribution will take you over the max, you pay agency adjusts it. My pay agency is DFAS under some mercenary agreement.

PO

 

[PessOptimist]

Just in case there are any questions about this and my memory was faulty, I looked at the last two LES for 2011. In 2011 the max contribution was $16,500. Divide by 26 and you get $634.61538461538461538461538461538 I made the contribution $635. On all paydays up to 12/15/11 payday, they deducted $635. On the 12./29/11 payday they deducted $625. 635*25=15875. 15875+625=16500. Where I screwed up was the catch up. I only contributed $211 per pay period so only contributed $5486 thus leaving $14 available for pay year 11.

This year I am contributing $654 (654*26=17004) per pay period and $212 (212*26=5512) catch up. I am expecting the same results in the last pay period, they will contribute $650 and $200.

No problems with IRS, no checks from TSP, no sweat. Once again my pay agency is DFAS. Your mileage may vary.

And, in case anyone is wondering or wants to comment, yes putting over $800 per pay period does hurt. It hurts less than being destitute later will.

FWIW max contribution for 2013 is $17,500. Catch up is still $5,500. Magic numbers are $674 and $212. Assuming there are only 26 pay periods in 2013. Some years there are 27 and I haven't figured it out yet.

PO

 

[Frixxxx]

And, in case anyone is wondering or wants to comment, yes putting over $800 per pay period does hurt. It hurts less than being destitute later will.

FWIW max contribution for 2013 is $17,500. Catch up is still $5,500. Magic numbers are $674 and $212. Assuming there are only 26 pay periods in 2013. Some years there are 27 and I haven't figured it out yet.

PO

Destitute - nice word......Pay Periods - I think this is a dead horse.....You get paid every two weeks 26 pay periods. Every 11th year or so, there may be a chance to have 27. so 3-4 times in a full time career to worry. :suspicious:

Oh, BTW, when I did have to get checks cut, I was contributing to 2 accounts civil service & military. I think that's why I got checks cut.

 

[PessOptimist]

Right about 26 pay periods in most years. The only reason I mentioned it was 2009 was a 27 pay period year and there was a lot of misinformation floating around at work. It just happened the first pay period (for me) ended the first week of the year. In that case, no matter what your agency names that pay period as far as IRS is concerned you got 27 pay checks that calendar year. It wouldn't matter at all since the my agency apparently will not exceed the max contribution.


So, ignore anything I wrote about the number of pay periods.

My example applies to a DOE civilian being paid by DFAS. Your agency's rules may be different.